Fighting sleaze is no easy task in a country like Afghanistan, as anti-corruption tsar Izzatullah Wasifi can testify. The economy is awash with opium money, and bribery and backhanders are rife, as confirmed by yesterday's alarming UN report.

Then again, Mr Wasifi is unusually well acquainted with the perilous lure of easy drug money.

Twenty years ago US police arrested a young Afghan emigrant at his hotel room in Caesars Palace, Las Vegas. The Afghan, who introduced himself as Mr E, tried to sell a bag of heroin to an undercover detective. At his trial, prosecutors said it was worth $2m.

The man spent three years and eight months in a Nevada state prison before being released on parole. His wife, who had stood lookout in the hotel corridor, received a probationary sentence.

Now Mr E - or Mr Wasifi - is the director general of the Afghan government's main anti-corruption agency.

He plays down the 1988 drug bust as a little youthful fun gone wrong.

"It was my honeymoon. I was a youngster and youngsters do stuff," he said with a shrug during an interview at his modest Kabul office. "Stuff like gambling, drugs" - he rubbed a finger against his nose and sniffed - "and girls. I was a Las Vegas boy."

The official insisted it was far in the past - "I have paid the price" - and compared himself to more famous politicians who have fallen foul of the law. "Even George Bush has a record," he said, referring to the US president's 1976 conviction for drink driving. "He was arrested, same shit as me. There's no difference between him and me."

After decades of violent instability, few Afghan officials can boast of a squeaky-clean track record. Compared with more senior officials accused of torture, murder and mass rape, Mr Wasifi is a minnow of misconduct.

But critics say that perceptions matter, and that Mr Wasifi's colourful past is a bridge too far, especially in a country that produces 93% of the world's heroin, and where drug money has infected every level of government.

Crime

Yesterday Antonio Maria Costa, executive director of the UN Office on Drugs and Crime, underscored growing worries about corruption. "The government's benign tolerance of corruption is undermining the future. No country has ever built prosperity on crime," he said.

Several foreign diplomats said they were unhappy that although reports of Mr Wasifi's conviction surfaced five months ago, he has kept his job. "It is outrageous," said a senior western diplomat. "We've made it quite clear that we want him removed."

Other critics say the controversy is symptomatic of a wider malaise - the failure of President Hamid Karzai to tackle the culture of greed that is eroding his authority and the legitimacy of his government.

"There is a very serious problem that affects all efforts to win hearts and minds and build their confidence in the state," said Ahmad Nader Nadery of the Afghanistan Independent Human Rights Commission.

The nexus between drugs and corruption is most powerful at the interior ministry, according to a recent report by the UN and the World Bank. It found that drug gangs have bought the loyalty of police chiefs and government officials across the country. One senior officer said that any police chief who refused to get involved in the trade would be "threatened to be killed and replaced".

Mr Karzai's supporters counter that he is leading an inexperienced government preoccupied with the pressing threat of the Taliban insurgency. Also, in appointing government officials he suffers from a chronic shortage of qualified personnel. "There's a real lack of good people in the ministries," said one diplomat. "Karzai pulls the levers of power and they come away in his hands."

Nevertheless the accusations of corruption continue to grow. One of the most egregious examples can be found a few streets from Mr Karzai's presidential palace in Sherpur, a gleaming new neighbourhood in central Kabul. Here, dozens of giant gaudy mansions squeeze into small plots. Pink or green windows, towering Roman columns and mirrored cupolas peek over high walls and concrete blast barriers. A giant stone eagle perches on one roof. The British embassy stands across the road.

A property agent stood on the roof of one glass-walled mansion, pointing at the neighbours and naming the owners. "General in the army. General. Minister. Warlord," he said.

Sherpur was army land until 2003 when Marshal Fahim Khan, then defence minister, parcelled it out to relatives, ex-ministers and former militia commanders for a nominal price. A government commission set up to investigate the scandal never made its findings public. Last week Muhammad Ajan stood outside his two near-completed mansions, hoping to find a wealthy western tenant. He bought the plot from Mr Khan for $250,000 two years ago, he said. His own fortune came from "exporting animal skins to Pakistan".

Some of Sherpur's newest tenants include international organisations helping to rebuild Afghanistan - the Spanish embassy, al-Jazeera, the Mines Advisory Group, and International Relief and Development (IRD), a US government-funded contractor.

"This is what outrages me," said Mr Nadery. "It demonstrates a state of impunity where there is no accountability for anyone, not even the international community."

Mr Karzai has introduced some reforms. Senior police appointments are now scrutinised by an international panel and the process is broadly considered a success. Other top government positions are vetted by an advisory board, although Mr Karzai retains veto power and only five jobs have so far been examined.

But Mr Karzai refuses to move against the rich, powerful and well connected. Although elected with an overwhelming mandate in 2004, under Mr Karzai no big drug dealers have been arrested in Afghanistan, and no government minister has been fired for corruption.

The problem, many say, is Mr Karzai's political style. In Afghanistan's tribally dominated culture, he has made an art of conciliation and compromise. He also values family loyalty. One of the most persistent complaints is that he has failed to act against a close relative widely considered to be a big player in the Kandahar drugs business.

The Guardian made several email requests for comment from Mr Karzai's spokesmen without reply.

Frustrated

Mr Wasifi may owe his job to his relationship with Mr Karzai - the two have known each other since childhood. He preferred to concentrate on the future, he said, and his plans for rooting out drug-related corruption. But he was being frustrated at every turn.

Waving a sheet containing a list of 73 cases, he said: "All these are pending. Nothing has been done," before launching into a tirade against the "thieves" at the department of justice.

"We need strong and determined leadership in this country - no chickens," he concluded. "Chickens cannot work in Afghanistan."